Last Thursday, 29 March, I (Koen Klokgieters) was present as one of three guest speakers at the LogInn Event 2007. This annual conference is organised by and for the MBA students at the Erasmus University in Rotterdam. The theme was SCM and Innovation Management, and I was asked to indicate which issues relate to both SCM and innovation. I thought it would be a good idea to shine a light on the social consequences of Open Innovation Networks.
Following an opening speech by Martijn Lofvers (chief editor of SCM Supply Chain Magazine), Coca-Cola Logistics manager, Jan Broekhuizen, discussed the far-reaching consequences of the new Coca-Cola bottle for the organisation of the supply chain. Director Procurement of ASML, Hans Dijkhuis, then explained how important and complicated it is to involve suppliers in high-tech product development. The subject material of both gentlemen laid an excellent basis for my talk on open innovation networks.
From SCM to Open InnovationIn my speech, I explained that Supply Chain Management in combination with innovation alone is not the optimum co-ordination of business processes in the value chain. There is also the question of how, as a company, you organise your R&D to the best effect and what consequences such a setup will have for your company structure and business model.
A relatively new trend is that R&D and innovation are carried out together with, or outsourced to, suppliers or partners within the existing supply chain and beyond it. Companies that decide to carry out the innovation process on a structural basis with each other, or that choose to have it largely carried out externally, are operating in Open Innovation Networks.
PhilipsOne of the companies leading the field in this is Philips. Philips has outsourced a large part of its R&D and carries out innovation projects with an ecosystem of partners from within and outside of the existing supply chain. The best-known results of this are perhaps Senseo with DE and the Perfect Draft with various breweries. But many components and part-products are developed in this way on behalf of Philips.
If you opt for a sustainable open innovation network with partners, you not only need to adapt your business model, but you should also take account of the social consequences that such a network brings with it. First of all, one way or another, a kind of flexible input of R&D staff will be required. Also, as an organisation you will be dependent on the reputation of your network partners. As soon as one of your partners makes a mistake, this will have consequences for you. There are two developments that raise these modern network issues: Flexecurity and Reputation Management.
FlexecurityThe word ‘flexecurity’ is suggestive of both ‘flexibility’ and ‘security’. The flexible part refers to a flexible input of personnel and a flexible right of dismissal. ‘Security’ gives the employees some guarantee of work and income, despite a relaxation of the right of dismissal. This ‘security task’ must shift from the individual organisation to the network. The government must play a facilitating role in this by making people more widely deployable, by means of retraining and schooling and the encouragement of universities and schools. Motivating people to set up their own companies could also help here.
Reputation ManagementIt used to be that as an organisation you only had to worry about your own reputation and the perception the stakeholders had of you. If you operate in a network, each partner in your ecosystem can influence your reputation positively or negatively. An example of a branch that featured negatively in the news recently was the pension funds sector. An investigation by the VPRO news programme Zembla showed that some of the money in the pension funds was being invested without their knowledge in the manufacture of cluster bombs. If as an organisation you participate in an open (innovation) network, Reputation Management is therefore of vital importance.Together with universities and network organisations, we (Capgemini) carry out research into open innovation networks and the social consequences of these. I believe that we are well on the way to helping customers to solve issues in the area of open innovation, but we definitely need to undergo further development collectively. And as an organisation we are continuously developing an ecosystem (read I-network) of partners. But it will be necessary for us to take on even more responsibility ourselves on behalf of the value chain, the partners and the customer!